The real estate market uses Multiple Listing Services (MLS) to streamline the process of buying and selling properties. Within the MLS system, various status codes indicate the current stage of a listing. One such status, often encountered, is "DRF," which can cause confusion for buyers, sellers, and even real estate agents. This comprehensive guide will clarify what DRF status means in real estate MLS and offer insights into related property statuses.
What does DRF stand for in Real Estate MLS?
DRF typically stands for "Deposit Received, Financing Contingent." This means a buyer has made an offer on the property that has been accepted by the seller, and a deposit has been placed on the property to show good faith. However, the sale is contingent upon the buyer securing financing (a mortgage). The transaction is not finalized until the financing is approved.
Understanding DRF Status: A Closer Look
The DRF status signifies a crucial stage in the real estate transaction. Let's break down the key components:
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Deposit Received: A buyer has put down an earnest money deposit. This demonstrates their serious intent to purchase the property. The amount of the deposit varies depending on local customs and the agreement between buyer and seller.
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Financing Contingent: The sale is contingent on the buyer's ability to secure a mortgage loan. This is a standard clause in most purchase agreements, protecting the buyer if they cannot obtain financing.
What happens next with a DRF status listing?
While a property is in DRF status, several things occur behind the scenes:
- Mortgage Application: The buyer applies for a mortgage loan with a lender.
- Loan Processing: The lender assesses the buyer's financial situation, credit score, and the property's appraisal to determine loan eligibility.
- Appraisal: The property undergoes an appraisal to verify its market value and ensure it aligns with the loan amount requested.
- Underwriting: The lender's underwriters review the entire loan application and supporting documentation to determine if the loan should be approved.
Possible Outcomes of a DRF Listing:
Several outcomes are possible once the financing process is complete:
- Closing: If the financing is approved, the deal proceeds to closing, and the property transfers ownership to the buyer.
- Contingency Removal: Once financing is secured, the contingency is removed from the contract, and the status might change within the MLS to reflect the progress (e.g., to "Pending").
- Financing Fall-Through: If the buyer fails to secure financing, the contingency is invoked, and the deal falls through. The property would then likely return to an "Active" status in the MLS.
Frequently Asked Questions about DRF Status
Here we address some common questions surrounding DRF status in real estate MLS:
Can I still make an offer on a property with DRF status?
Generally, yes. While an offer has been accepted, the deal is not yet finalized. However, it is crucial to contact the listing agent to understand the current situation and the likelihood of the deal closing.
How long does a property typically stay in DRF status?
The duration varies greatly depending on the lender's processing time, appraisal delays, and the buyer's financial situation. It could range from a few weeks to several months.
What does it mean if a property's status changes from DRF to Active?
This typically indicates that the financing contingency was not met, and the deal fell through. The property is back on the market and available for new offers.
Is it risky to buy a property in DRF status?
There’s always risk in real estate. While purchasing a home with DRF status is not inherently riskier than buying an active listing, it means the transaction is not yet guaranteed. Understanding the potential risks and working with a knowledgeable real estate agent is essential.
What other status codes might I see on the MLS?
Many other status codes exist within MLS systems depending on the specific MLS board used. Some examples include: Active, Pending, Contingent, Closed, Cancelled, and Withdrawn. The exact definitions can vary slightly from one MLS to another, highlighting the importance of working with a local real estate professional.
This detailed explanation of DRF status in real estate MLS should provide clarity on this often misunderstood listing status. Remember, consulting with a real estate agent remains crucial for navigating the complexities of real estate transactions. They can provide valuable insights and guide you through the process efficiently and effectively.
